Business
Lycra files for bankruptcy to cut $1.2 billion in debt
The Lycra Company files for bankruptcy with plans to cut debt and complete restructuring within 45 days.
The Lycra Company has filed for Chapter 11 bankruptcy protection in Texas as it looks to restructure its balance sheet, reduce debt and stabilise operations with strong backing from lenders.
Key Highlights
- The Lycra Company files for Chapter 11 bankruptcy
- Aims to cut $1.2 billion in debt
- Lenders to provide $75 million in new financing
- Operations to continue without disruption
- Company expects to exit bankruptcy in 45 days
Prepackaged restructuring gains lender support
The company said it has secured near-unanimous support from lenders for a prepackaged restructuring plan.
As part of the process, lenders have agreed to provide $75 million in fresh financing and eliminate a substantial portion of the company’s $1.53 billion debt load.
The company expects to complete the restructuring and exit bankruptcy within 45 days.
Operations to continue as usual
The Lycra Company said the bankruptcy process will not impact its day-to-day operations.
Manufacturing, customer relationships, vendor payments and employee operations are expected to continue without disruption during the restructuring.
Debt troubles trace back to past acquisition
The company’s financial strain dates back several years, following its 2019 acquisition by Ruyi Textile and Fashion International Group.
After defaulting on its debt, lenders took control of the business in 2022, but performance remained weak.
The company cited multiple challenges, including declining demand, increased competition from lower-cost spandex products, US tariff uncertainty and ongoing legal disputes with former owners.
Legacy player under pressure
Founded in 1958 as part of DuPont de Nemours, the company pioneered spandex production and remains a major player in the global stretch-fabric market.
It currently operates eight manufacturing facilities, three research labs and 11 offices worldwide, employing around 2,000 people.
What happens next
The company will move quickly through the Chapter 11 process with lender backing, aiming to emerge with a stronger balance sheet and improved financial flexibility.
Its ability to stabilise performance post-restructuring will depend on demand recovery and competitive positioning in the global textile market.
FAQs
Q1: Why did Lycra file for bankruptcy?
To reduce its debt burden and restructure its finances after years of underperformance.
Q2: Will Lycra continue operations?
Yes, the company said operations will continue normally during the restructuring.
Q3: How much debt is being reduced?
The plan aims to cut about $1.2 billion in debt.
Q4: When will Lycra exit bankruptcy?
The company expects to complete the process within 45 days.
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